JFE Holdings Profit Rises as Steel Product Prices Gain

April 24 (Bloomberg) -- JFE Holdings Inc., Japan’s second-largest steelmaker, reported a 49 percent gain in fourth-quarter
profit with the help of price increases and a weaker yen.

Net income rose to 26.3 billion yen ($257 million) in the
three months ended March 31, from 17.6 billion yen a year
earlier, according to Bloomberg calculations based on full-year
results released by the Tokyo-based company today.

Earnings at Japanese steelmakers are being revived as Prime
Minister Shinzo Abe’s economic stimulus policies cut the value
of the yen by 15 percent since the end of 2012, making products
manufactured by the industry and customers, such as carmakers,
more cost competitive. JFE’s average product prices rose 13
percent in the fourth quarter compared with the same period a
year ago, according to the company’s statement.

“In addition to the correction of the yen’s appreciation,
we see strong domestic demand in the areas of construction and
automobiles, while our cost-reduction efforts were bearing
fruit,” Executive Vice President Shinichi Okada said today at a
press conference, referring to full-year profit results at the
company’s steel division.

JFE’s annual net income more than doubled to 102.4 billion
yen, beating its estimate by 7.8 percent. Sales increased 15
percent to 3.67 trillion yen, while operating profit more than
tripled to 153.3 billion yen, the statement said.

Japan Demand

JFE didn’t provide an outlook for the current year, saying
it was unable to make a reasonable forecast because the term of
raw materials contracts shortened and product prices are under
negotiation.

JFE expects overall demand for steel in Japan will remain
strong this business year even after sales taxes increased to 8
percent in April from 5 percent, according to Okada. A supply
glut in Asia’s export markets won’t be resolved anytime soon as
China expands production amid slower growth in Asia’s biggest
economy, he said.

Nippon Steel & Sumitomo Metal Corp., Japan’s biggest steel
producer, will announce full-year results on May 9. It may
report a profit of 230 billion yen, according to the median of
18 analyst estimates compiled by Bloomberg, reversing a year-earlier loss.

JFE, which has declined about 23 percent since Jan. 1,
closed up 6 yen, or 0.3 percent, to 1,917 yen in Tokyo trading
after climbing as much as 2.1 percent after the earnings were
released.